I understand that perpetual motion is impossible, but I became confused when a friend of mine told me that the orbits of the planets is an example of perpetual motion. Will earth's orbit ever end, and whats wrong with his statement. I'm asking for a simple answer to 'disprove' my friends 'theory'.

By "perpetual motion machine", we mean a gadget that is able to perpetually move despite its motion being used to do some work, and/or despite the friction that converts a part of its kinetic energy to heat. Equivalently, "perpetual motion machine" (of the first kind) is a gadget that violates the conservation of energy. Planets don't - they move (almost) indefinitely but they don't do work and they're not being decelerated by any (significant) friction. So they don't violate the energy conservation law and despite their indefinite motion, we don't classify them as "perpetual motion machines".
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Luboš MotlMay 1 '11 at 10:42

Lubos is right: The rule is that there's no such thing as a perpetual motion machine. The last word is critical, as it conveys the point about getting work out of the system.
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Ted BunnMay 1 '11 at 14:35

Actually, what is impossible is a perpetuum mobile which is a machine or system that breaks the first or second law of thermodynamics. Planetary motions break none of those laws, therefore there is no contradiction with their "perpetual motion".

The question of the end of Earth's orbit is a different one though. Certainly, the Earth's orbit will end, most likely because the Sun will engulf the Earth as it grows to a red giant. If it doesn't end sooner.

Strictly speaking, planetary orbits are not perpetual motion. As the planet (and their star) rotate around their common center of gravity, they emit gravitational waves. Those gravitational waves drains the planet/star orbital system on energy so the planet eventually get's closer and closer to its star.

Now this orbital decay due to gravitational wave emission is ridicoulusly small so it has only been measured for extreme systems like binary neutron stars (which are heavy and may orbit each other within minutes, seconds or just a fraction of a second). Our planet Earth is subject to gravitational wave emission as well, but the orbital decay is so small that it in practice won't affect earth within the Suns lifetime, instead of Earth spiralling into and being devoured by our Sun, it will rather be our Sun (turning into a red giant) which extends beyond the current orbit of Earth and thus devours it.

So even by cosmological timescales, planetary motion around a star will go on for a long time, e.g for the lifetime of a sun-like star and beyond.